Q2 2025 Johnson & Johnson Earnings Call
Good morning and welcome to Johnson and Johnson's second quarter 2025 earnings conference call. All participants will be listening only mode until the question and answer session of the conference.
This call is being recorded.
If anyone has any objections, you may disconnect at this time.
Speaker Change: If you experience technical difficulties during the conference, you may press star zero to reach the operator. I will now turn the conference call over to Johnson and Johnson. You may begin.
Relations for Johnson and Johnson. I am excited to be here today and to lead the investor relations team moving forward.
Speaker Change: Welcome to our 2025 second quarter review of business results and updated Financial Outlook.
Speaker Change: First, a few Logistics.
As a reminder, today's presentation and Associated schedules are available on the investor relations section of the Johnson and Johnson website at investor.com.
Speaker Change: Please note that this presentation contains forward-looking statements regarding among other things. The company's future operating and financial performance Market position and business strategy.
Speaker Change: Your caution, not to rely on these forward-looking statements which are based on the current expectations of future events using the information available, as of the date of this recording and a subject to certain risks and uncertainties that may cause a company's actual results to differ materially from those projected.
Speaker Change: Description of these risks uncertainties and other factors can be found in our SEC filings, including our 2024 form, 10 K, which is available at investor.gamestop.com.
Speaker Change: Additionally, several of the products and compounds discussed today are being developed in collaboration with strategic Partners or licensed from other companies.
Speaker Change: Slide acknowledges those relationships.
Speaker Change: Moving to today's agenda what are chairman and CEO will discuss our business performance and key catalysts I will then review the second quarter sales and p&l results.
Speaker Change: Joe Walk. Our CFO will then close by sharing an overview of our cash position and guidance update for 2025.
Speaker Change: Jennifer Talbott Executive Vice President worldwide, chairman Innovative Medicine, John Reed, Executive Vice President, Innovative medicine, research and development.
Speaker Change: And Tim Schmidt Executive Vice President worldwide, chairman Medtech will be joining us for Q&A.
Speaker Change: To ensure we provide enough, time to address your questions. We anticipate, the webcast will last approximately 60 minutes.
With that, I will now turn the call over to Wain.
Wain: Thank you, Darin and hello.
I'm excited to talk about our very strong second quarter.
Wain: Today's results showcase the strength of our uniquely Diversified business as the only major Healthcare Company operating in both the metech and Innovative medicine, sectors.
In the second quarter, we delivered operational sales growth of 4.6% across our business.
Wain: in Innovative medicine, we reported 3.8% of operational sales growth,
Wain: Delivering more than 15 billion dollars in quarterly sales for the first time.
Wain: Company has grown through the loss of exclusivity of a multi-billion dollar product in the first year, in our case Stelara and yet that is exactly what we are doing.
And for the second quarter in a row,
Wain: our performance was driven by double digit growth across 13 Brands, including that select carvykti, Tech value, and tal, as well as Rivals and spread.
animatic, we deliver 6.1% operational, sales growth with particularly strong momentum in cardiovascular, surgery ambition,
Wain: Based in our strong performance. In the quarter we are pleased to raise our full year sales guidance by 2 billion dollars an EPS guidance by 25 cents from $10.60 to $10.85
Wain: Besides like these are a direct result of our deep and resilient portfolio. It's what makes Johnson and Johnson unique.
Today, we will focus on the remarkable ways. We are driving Innovation and creating value for patients and shareholders. We will highlight the depth of our portfolio and pipeline focusing on 68 years of unmet need and where we are delivering significant growth oncology in monology Neuroscience, cardiovascular, surgery and vision.
Where we are extending and improving lives in meaningful ways.
Wain: Let's start with Innovative medicine and oncology. What? We have a bold Vision to eliminate cancer.
Wain: Our leading products for the treatment of blood cancers and solid. Tumors are built on Cutting Edge. Scientific platforms that are transforming outcomes for patients with more than 10 products in market across 26, approving indications, and over 25 treatments in late stage development, we expect to become the number 1 oncology Company by 2030 with sales of more than 50 billion dollars.
Wain: when you look at,
Wain: Results in.
Wain: Ecology with operational, sales growth of 22.3%. You can see that we are well, on our way to achieving that.
Wain: I'll draw your attention to 3 key areas of Q2 progress.
Wain: first is,
Wain: Multiple myeloma, what we have treatments in every line of therapy.
Approximately 80% of Myoma patients today, receive a Johnson and Johnson medicine at
Wain: point in their treatment Journey.
Wain: Q2, we presented several important sets of data.
They include new 5-year data showing a single treatment of our carti therapy. Carvykti has the potential to deliver long-term remission.
We also presented the First Data from our investigational try specific antibody which showed an unprecedented 100% overall response rate in heavily pretreated patients.
With results like this. We are closer than ever to our ambition of curing multiple Myoma.
Wain: Second is lung cancer where our chemotherapy free combination of ribbon plus last, Clues has a projected overall, survival of at least a year over the current standard of care in front line known as small cell, lung cancer with egfr G mutations.
Wain: In 10 to prescribe continues to grow among Healthcare professionals, which you can see in our strong quarterly sales.
This is a life-changing advancement for patients and 1. We are building on with a pipeline of Novel Therapies.
Wain: And third is bladder cancer where we are excited to share that we have received FDA priority review for 3200. A first of its kind drug releasing system.
We anticipate launching 2, 200 for high-risk non-muscle invasive bladder, cancer. Later this year.
Wain: A transformational product that harnesses our unique expertise in both.
Wain: Innovative medicine and medic.
We expect that 200 to generate at least 5 billion dollars in annual Peak year sales.
Wain: In Immunology, we have a 25 year Legacy of redefining the standard of care and we are just getting started.
Wain: With 6 products in market across 14 approved, indications, and many treatments in late stage development. We are expanding treatment options for patients and restoring health for millions of people around the world.
Wain: From and now exploring targeted oral peptides and future combinations. The growth potential of our Immunology portfolio and pipeline continues to be significant.
For Immunology. I will draw your attention to 2 key areas of Q2 progress.
Wain: First is stem fire, which has recently expanded into inflammatory bowel disease,
Wain: 30% in the quarter.
Wain: With strong uptake in Colon's disease and alterative Colitis, we expected to generate at least 10 billion dollars annually in Peak year sales.
Wain: As a, once a day pill, this molecule has the potential to set a new standard in the treatment of plaes and we look forward to sharing more in the coming months.
Wain: In Neuroscience, we are building on a 70 Year Legacy and expect to be the number 1 company. By the end of the decade,
Wain: we are pushing boundaries in diseases like sceeto depression and Alzheimer's which together affect 1. In 8, people worldwide.
Wain: In Q2 53%, delivering sustained double-edged growth and demonstrating the power of this medicine for patients, living with difficult to treat depression. We also completed the acquisition of intracellular therapies this quarter.
Intracellular scapula is approved to treat adults with schizophrenia and bipolar depression. And we are excited about the anticipated major depressive disorder approval later. This
Wain: Year.
With the addition of capita, we now have 5 Neuroscience products in market across 6 approved indications and 8 treatments in late stage development.
Wain: La adds to Johnson and Johnson's robust lineup of therapies with 5 billion dollar plus potential in Big Year sales and further solidifies sales growth above analyst, expectations through the rest of the decade.
Wain: Turning to Medtech and in cardiovascular specifically, we are leaders in heart recovery circulatory, restoration and electrophysiology.
Wain: Cardiovascular has some of the largest and made needs in healthcare and is 1 of the fastest, growing spaces? Metic.
Wain: In Q2, we deliver over 22% operational, sales growth over the quarter driven by new product performance, in a biome Med, shock, wave and strength in mapping in electrophysiology.
Wain: Today, we're a leader in 4 of the largest and highest growth Medtech segments, within cardiovascular intervention impacting more than 1 million patients each year. Now let me highlight 3 ideas of important progress from
You too.
Wain: First is electrophysiology, which delivered close to 10%. Operational sales growth over the quarter driven by new product performance and strength in mapping,
Wain: We have now completed more than 10,000 body pulse cases globally with a reported neurovascular event rate of less than 0.5% consistent with published rates across other PFA platforms.
Wain: Second, we continue to advance a suite of cardiovascular solutions to expand our Market leadership, including our dual Energy, thermocol, Smart Touch SF c c what we performed. Our first cases in Europe this quarter,
It also includes Omni pulse what we presented. Strong early data that will expand our portfolio of tools for safe and streamlined ablation procedures.
Wain: Third is show waves unique, intravascular lithotripsy technology or ivl which has transformed the treatment of atherosclerotic cardiovascular disease and is driving significant growth. Shock wave is expected to be our 13th billion dollar metric platform by the end of the year, a position that is further strengthened by a compelling, body of evidence on the benefits of the
Wain: Technology.
Wain: This includes data showing an ivl first. Approach can achieve excellent outcomes in female patients with complex calcified coronary artery disease.
Wain: In surgery, we have spent 140 years advancing, the standard of care and today, our surgical Technologies are used in most operating rooms around the world.
Q2 highlights include the introduction of the ethicon 4000 surgical stapler, the newest advancement in our surgical portfolio,
Wain: For patients and hospitals.
Wain: Its Advanced stapling technology will be harnessed for future. Use exclusively on the ottava robotic surgery system.
and as mentioned on our earnings call in April, ottava completed, its first clinical cases, gastric bypass surgeries performed in Houston
Polly: in our conversations with surgeons who have spent time on ottava, they tell us that they are eager for the systems sophisticated architecture design features like twin motion the surgeon and trusted ethical Advanced instrumentation only available in Na and the future connection to our open Digital ecosystem. Polly
We plan to submit for an FDA dinova approval, next year.
Polly: Finally Vision. What? We have a deep Legacy in developing transformational innovation.
Polly: With quarterly growth of 4.6% across the business and 8.9% in surgical Vision. The portfolio has a robust growth trajectory driven by our active view. Oasys Max 1 Day, family of contact lenses and our techniques, all DC and techniques PC intraocular lenses.
Polly: And with the queue to release of the first disposable multi focal lenses for people with a stigmatism. We have high expectations
Speaker Change: You know, few other healthcare companies can talk about their impact across as many high growth areas as Johnson, and Johnson, and none spanning both Innovative medicine and medic.
The 6 examples are only a cross-section of our Cutting Edge portfolio.
Speaker Change: The steps and breathe is who we are at Johnson and Johnson.
Speaker Change: it's how we grow through a major loss of exclusivity, how we have reinvented ourselves time and time again, and how we will deliver strong financial performance, through the end of the decade, and Beyond
The bottom line is this Johnson and Johnson's Relentless focus on Innovation guilds results.
Quarter after quarter, year after year.
I will now turn the call back over to DAR.
Speaker Change: Thank youin moving to our financial results unless otherwise stated the percentages quoted represent, operational results and therefore exclude the impact of currency translation.
Speaker Change: Starting with Q2, 2025 sales results.
Speaker Change: Worldwide sales were 23.7 billion for the quarter sales increased 4.6% despite an approximate 710 basis. Point headwind from stellar,
Speaker Change: Growth in the US was 7.8% and 0.6% outside of the US.
Speaker Change: Worldwide growth was positively impacted by 160 basis points, primarily due to the intracellular and shock wave acquisitions.
Speaker Change: Turning now to earnings for the quarter, net earnings were 5.5 billion with diluted earnings per share of 2.29 versus diluted earnings per share of $1.93 a year ago.
Speaker Change: adjusted net earnings for the quarter were 6.7 billion with adjusted diluted earnings per share of $2.77 representing, a decrease of 2.1% and 1.8% respectively compared to the second quarter of 2024
Speaker Change: the decrease is driven by interests associated with incremental, debt from the intracellular acquisition and GP erosion from stellar
I will now comment on business sales performance in the quarter with a focus on the 6 areas, waen discussed that will drive significant growth for the Enterprise.
Speaker Change: Beginning with Innovative medicine, where our results demonstrate the depth of our expertise in oncology immunology and Neuroscience.
Worldwide sales of 15.2 billion dollars increased 3.8% despite an approximate 1170 basis, point headwind from Star,
Speaker Change: Demonstrating the strength of our key Brands and new launches.
Growth in the US was 7.6% and minus 1.6% outside the US.
Speaker Change: Growth outside of the US was negatively impacted by stellar biosimilars and the co 19 vaccine.
Speaker Change: Points on worldwide growth, due to the intracellular acquisition.
In oncology starting with myeloma, dialects growth was 21.5%, primarily driven by continued, strong share gains of approximately 4.1 points across all lines of therapy with close to 8 points in the Frontline setting as well as market growth.
Speaker Change: Our Victory achieved sales of 439 million with growth of over 100%.
Driven by share gains and capacity expansion.
Speaker Change: This reflects continued strong sequential growth of 17.9% as we expand outside of the US.
Speaker Change: Tech Val and toe growth was 22.4% and 54.3% respectively, bolstered by continued expansion into the community setting
Speaker Change: Patient demand remains strong despite continued adoption of longer dosing intervals.
In prostate cancer, a leader delivered, strong growth of 21% with continued share, gains and market growth.
Speaker Change: In lung cancer, ryber van plus lass Clues. Delivered sales of 179 million and growth over 100% with sequential growth of 26.5% driven by continued, strong launch uptake.
We continue to see, share gains in both first and second lines of therapy.
Speaker Change: Within Immunology, trim fire delivered growth of 30.1%, primarily driven by share, gains with continued strong uptake across recently, launched IBD indications and overall market growth.
Stellar declined by 43.2% driven by the impact of biosimilar, competition and Part, D redesign, which is in line with our expectations.
Speaker Change: In Neuroscience. Privato growth of 53% was driven by continued. Strong demand from Physicians and patients long-acting injectables declined by 6.3%, due to the impact of Part D redesign and unfavorable patient mix.
Speaker Change: I'll now turn your attention to Medtech.
Speaker Change: Worldwide sales of 8.5 billion dollars increased 6.1%.
With growth of 8% in the US and 4.1% outside the US driven by strong performance in 3, Focus areas, cardiovascular, surgery and vision.
Speaker Change: Acquisitions and devices. Had a net positive impact of 200 basis points on worldwide growth primarily due to shock wave.
And cardiovascular electrophysiology delivered growth of 9.8% versus prior year, driven by strength and competitive mapping new product performance and procedure growth.
Speaker Change: Aium, add delivered growth of 16.9% with continued strong adoption of Impala technology and Shockwave delivered, strong double-digit growth with the recent introduction of the javelin and E8, catheters.
Speaker Change: As a reminder, the acquisition benefit of Shockwave was lapped to the end of May.
Speaker Change: Surgery grew 1.8% despite the vestiges negatively impacting results by approximately 60 basis points.
Speaker Change: Performance was primarily driven by technology penetration in wound closure and the strength of the portfolio and bio surgery.
Growth was partially offset by competitive pressures in energy and the negative impact of China vbp across the portfolio.
Speaker Change: Envision contact lenses and other ocular products, grew 2.9% driven by strategic price actions and strong performance in the ACU Oasys 1 Day. Family of contact lenses. Including the recent launch of Oasys Max 1 day multi focal for a stigmatism.
Speaker Change: Surgical Vision growth of 8.9% continues to be driven by strong performance in technis, Odyssey, Purity, and IHS.
the Orthopedics business declined by 1.6% driven by competitive pressures, the transformation program and China vbp,
Speaker Change: now, turning to our Consolidated statement of earnings for the second quarter of 2025,
Speaker Change: I'd like to highlight a few noteworthy items that have changed compared to the same quarter 3 a year ago.
Speaker Change: Cost of products sold deleveraging 150 basis points driven by product mix and amortization related to the intracellular acquisition and Innovative medicine as well, as Medtech macroeconomic factors and vbp in China.
Speaker Change: Research and development, expenses. Leveraged by 50 basis points, primarily driven by portfolio, rationalization and expense phasing in Medtech.
We continued our strong investment in research and development with 3.5 billion or approximately 15% of sales in Q2
Interesting. Come and expense was a net expense of 48 million as compared to 125 million of income in the second quarter of 2024.
Primarily driven by lower rates of interest and on cash balances and a higher average debt balance associated with the intracellular acquisition.
Speaker Change: Other income and expense was a net expense of 0.1 billion compared to an expense of 0.7 billion in the prior year.
Primarily driven by lower talc litigation, expense in 2025, and the 0.4 billion dollar loss on the sale of the retained stake. In chem view shares recorded in 2024
regarding taxes in the quarter are effective tax rate was 14.7% compared to 18.5% in the same period last year.
Speaker Change: I encourage you to review our upcoming tenkyu for details on the changes and taxes.
Lastly, I'll direct your attention to the Box section of the slide where we have also provided the company's income before tax net earnings, and earnings per share adjusted to exclude the impact of intangible amortization, expense and special items.
Now, let's look at adjusted income before tax by segments for the quarter.
In support of our efforts to increase Financial transparency. You will again. Find gaap to non-gaap reconciliations by segments in the supplemental schedules of our press release.
Speaker Change: Innovative medicine margin declined from 44.6% to 42.7% primarily driven by negative mix in cost of products. Sold related to solar
Medtech margin declined, from 25.7 to 22.2% driven by macroeconomic factors in cost of products sold as well as other income.
Joe Walk: This concludes the sales and earnings portion of the call and I will now turn the call over to Joe
Speaker Change: Thank you, Darren and glad to see your first earnings call is off to a good start. I look forward to you leveraging, your recent experience, leading the Innovative medicine Finance team to benefit Johnson and Johnson's investor relations function. Hello everyone. Thank you for joining us. Today as already highlighted, we delivered a very strong second quarter, exceeding expectations, on both the
Joe Walk: And bottom line.
Joe Walk: While our currently marketed products and platforms drove this quarter's performance, the progress, our pipeline in the first half of the Year, heightens, our conviction to achieve and I'd be willing to bet likely beat the upper end of the growth targets. We conveyed at our 2023 Enterprise business review,
As previously, mentioned by Ween and Darren the Innovative medicine business continues to grow through, Stellar's loss of exclusivity driven by our in-market portfolio.
We continue to advance our pipeline attaining significant clinical and Regulatory Milestones that will help Drive sustained and accelerating growth through the back half of the decade.
Joe Walk: In Medtech while we still have work to do, we saw improvement over first quarter results, driven by strong performance in the cardiovascular portfolio, surgical vision and wound. Closure in surgery, we remain focused on higher growth markets, enhancing competitiveness to gain market, share, and executing against our transformation initiatives to improve margins.
Joe Walk: Let's get into some of the financial commentary starting with our cash position.
Joe Walk: Free cash flow through the first half of 2025, exceeded 6 billion dollars, which accounts for elevated. Tax payments for related to the final annual tcja toll tax payment, when compared to the first half of 2024,
Joe Walk: We ended the second quarter with 19 billion dollars of cash and marketable, securities and 51 billion of debt for a net debt position of 32 billion. These figures include the debt raised for the 14.5 billion intracellular acquisition, which closed on April 2nd.
Regarding talc litigation. We expect the doward hearing to commence this fall and look forward to the court re-examining, the junk science, the mass tort plaintiff bar has funded to promote. Baseless tal claims against Johnson and Johnson.
Joe Walk: 5% to 5% with a midpoint of 92.9 billion or 4.8% representing a full point better when compared to Prior guidance.
Joe Walk: Excluding the impact from Acquisitions and destitutes are adjusted. Operational. Sales growth is now expected to be in the range of 3.2% to 3.7% compared to 2024.
Joe Walk: As you know, we don't speculate on future currency movements. And last quarter, we utilize the Gyro Spot rate relative to the US dollar of 1.11.
The US dollar has weakened across all major currencies. Since April last week, the Gyro Spot rate relative to the US dollar was 1.17 we estimate an incremental positive, foreign currency impact of 1.1 billion, versus previous guidance as such. We now expect reported sales growth between 5.1%
Joe Walk: To 5.6% with a midpoint of 93.4 billion or 5.4%.
Joe Walk: Currently our guidance does not include the impact of the most favored nation concepts, with respect to mfn, we share the administration's goal. That American patients should pay less by addressing the real drivers of higher us costs including middlemen driving up prices and foreign markets not paying their fair share.
Joe Walk: Turning to other notable items on the p&l.
Joe Walk: At the beginning of the year, we guided to an approximate 300 basis points Improvement in operating margin despite what you may have calculated on a year-to-date basis. We remain confident and reiterate our operating margin guide for the full year.
This is due to efficiency programs designed for margin Improvement as well as non-recurring 1-time. IP R&D charges that occurred in the second half of 2024,
This expected Improvement. Also takes into consideration, the solution from the intracellular transaction as well as what we know today about the impact of tariffs on our business.
Joe Walk: During our first quarter conference call, we anticipated an impact from tariffs in 2025, to be approximately 400 million dollars.
Joe Walk: Based on the current tariff landscape. We now anticipate the impact to be approximately $200 million exclusively related to our Medtech business.
Joe Walk: We will look to reinvest the differential to continue to accelerate our Pipeline and further power, the launch of our new products, those on the market with new indications and those with near-term anticipated approvals.
We continue to monitor what the future Year's impact could be from tariffs on our business.
Joe Walk: For net interest expense. We now project between 0 and 100 million an improvement from the previous guidance primarily driven by higher interest earned on cash balances
Joe Walk: Our effective tax rate is now expected to be in the range of 17% to 17.5% for the full year. With the increase largely due to an adjustment to the company's Global Tax Reserves.
Joe Walk: We are pleased that the 1 big beautiful, bill act provides certainty. For our previously announced 55 billion commitment to invest here in the United States.
Joe Walk: This includes Provisions, such as permanent expensing for domestic. R&D spend permanent bonus depreciation and 100% expensing of qualified production property, including our newly planned facility in North Carolina,
Joe Walk: We also welcome the improvements that were made to the international tax system.
For your modeling, it is worth noting that the tax rate on foreign earnings known as guilty is increasing by approximately 2% from a statutory rate of 10.5% to 12.6%, this will result in an approximate 1% increase to our Global effective tax rate in 2026.
Joe Walk: Returning to earnings per share, we are pleased to increase our reported adjusted earnings per share estimate by 25 cents to ten dollars, 85 or 8.7% at the midpoint for a range of ten dollars to $10.90, which is a combination of operational Improvement and the favorable foreign currency Dynamics. I referenced earlier, embedded in that is 8 cents of adjusted. Operational earnings per share in our guidance to 1068 or 7% at the midpoint.
Joe Walk: On now, provide some qualitative considerations on phasing for your models. We continue to expect both Innovative medicine and Medtech operational, sales growth to be higher in the second half of the Year versus the first half.
Joe Walk: Regarding Innovative medicine.
Joe Walk: Unfavorable impact of Part D redesign.
Joe Walk: Turning to Medtech, we anticipate an acceleration in growth to be driven by The increased adoption.
Of newly launched products in cardiovascular, surgery and vision.
We continue to expect normalized, procedure volumes, and typical seasonality patterns throughout the remainder of the year.
The art of financial commitments and what Walken has already referenced. We are excited for the expected pipeline progress in the remainder of 2025.
Joe Walk: If medicine this includes expected approvals in tar, 200 in non-muscle invasive, bladder cancer. Subcutaneous riber vant for non small cell lung cancer in the US.
Joe Walk: Trump FIA subcutaneous, induction for ulcerative colitis, and capita for a junked of major depressive disorder.
Joe Walk: Anticipated filings for approval include icora, Kendra in psoriasis and Trauma in psoriatic arthritis.
As far as data readouts, we are planning for ryouran in head and neck cancer and I coach her Kindra in an alternative colitis as well as head-to-head data versus satic 2 in psoriasis.
In Medtech, we continue to make progress with our clinical trials, for our ottava robotic surgical system. In our cardiovascular portfolio, we are planting regulatory submission for dual energy thermal cool, Smart Touch SF catheter for cardiac arrhythmia in the US and impella. ECP submission in heart recovery as well as Javelin and Shockwave E8. Launches in circulatory restoration outside of the US
Joe Walk: In Orthopedics, we will be launching a tune revision, hinge and a new plating system, called Vault in the US.
We will also be launching the ethicon 4000 stapler with 3D reloads in surgery and the ACU Oasys Max envisioned for a stigmatism.
Joe Walk: In summary, I trust you agree. The results delivered in the first half are evidence that our portfolio has the breadth and depth that enables us to attain growth, even in the face of a major LOE. We're very few if any other company could
Clinical advancements. Provide a robust base for Accelerated, Topline growth, not just for the remainder of this year, but for the back half of the decade, we're confident that the strength of our business model enables Johnson, and Johnson to navigate a dynamic external environment while delivering on our financial commitments.
Joe Walk: This is directly attributable to the hard work and dedication of our 138,000 colleagues who Focus daily on advancing, our pipeline increasing market, share, and progressing, breakthrough, treatments to patients. That create long-term value for our shareholders,
Speaker Change: Thank you. And with that, we are happy to take your questions. Kevin, will you please provide instructions for those seeking to participate in the Q&A?
Certainly, what obviously do you have any question and answer session? If you'd like to be placed into question queue, please press star 1 on your telephone keypad, if you'd like to withdraw your question, please press star the number 2.
Please let me your questions to 1 question only. Once again that star 1 to be placed into question queue and please ask 1 question and return to the queue. Our first question is coming from Chris shop from JP Morgan. Your line is now live.
Speaker Change: All right, great, uh, thanks so much for the question, um, JJ. I was to reported to a very strong Topline beat, despite the stellar eloe and I just be interested to join any color. You might hire of in terms of the drivers of upsides of the guidance for the year. As we think about how much of this is innovative business versus Medtech and any particular franchise has been those businesses that's thriving. Guidance rates, thank you.
Yeah, good morning, Chris and thank you very much for the question. I, I would say it's, uh, uh, both are contributing, uh, in terms of the strong performance and in fact, uh, I would say this is a great opportunity for Jennifer and Tim to address some of the strengths that we saw in our second quarter results. Uh, as you saw in credit to Jennifer and her team achieving the first 15 billion quarter, uh, despite 1.2 billion dollars of year-on-year, erosion, in the quarter from Stellar, I don't think any other company can do that. And then Tim notable improvement from what we reported in q1, that gives us a lot of enthusiasm for the balance of this year, where we, we, as you heard in my earlier comments, we expect both businesses to actually continue that momentum and grow better in the second half than the the first half. But when I turn it over to Jennifer and Tim to give you some insights from their perspective,
Speaker Change: 15.5% growth really demonstrating the strength, across our portfolio. We had 13 brands that were growing double digits. And uh, and as we take a look at those, they are uh, the vast majority of those are not only our growth drivers for today and tomorrow, but are also key growth drivers out through the end of the decade. So a few of the notable, um,
Speaker Change: drivers there. So first in oncology,
Speaker Change: Darzalex.
Continues to to perform very well carvykti performed. Well erita and we're really pleased with the launch up takes thus far on rye prevent plus last clues in non small cell, lung, cancer and Immunology. Trauma is off to a great start in ulcerative colitis and also Crohn's disease and across Neuroscience. Um, both bravado and capita. Both had really, really strong performance for the quarter. So as I mentioned, 13 brands, with double digit growth, I won't go into all of those but, uh, but really, really strong across the base of our business and we're really excited um throughout the rest of this year because we've got a number of additional catalysts that are coming through with uh with additional approvals and such.
Speaker Change: Tim.
Speaker Change: Thank you. Jennifer and, and Christy your question, I mean, for Medtech, we were happy with our Q2 operational growth of 6.1%. This is a 4.4% sequential improvement over the first quarter. I think, you know the, the primary contributors certainly cardiovascular 22% growth. You know, we are by far in a way. Now, 1 of the largest and certainly the fastest growing Medtech company in cardiovascular, not only on the back of the success of the ABIA Med and Shockwave um Acquisitions. But also the tremendous improvements you saw in our electrophysiology business which by the way, as a 5 billion base,
And so tremendous performance is there. We also saw a great results in Vision. Primarily driven both by contact lenses as well as almost double digit growth in surgical vision and then continued solid growth in surgery especially on the back of our performance in wound closure. And by our surgery, both of those businesses, multi-billion dollar businesses, by the way, growing close to 7%. And as we look to the back half, what gives us confidence in continued acceleration as a couple of things? Firstly, it's important to remember. That q1 and Q2 had difficult prior to your competitors. But more importantly what gives us confidence is the further acceleration as we continue to shift our portfolio on to higher growth markets and really bring truly differentiated Innovation to Market in cardiovascular that will continue with abiomed which continues to add to our portfolio. But more importantly, the evidence base around the benefits of impella continues to to impress, both with the danger shock study and the recent ACC and a
Speaker Change: Age guidelines, supporting impella, uh, uh, use in patients with cardiogenic, shock Shock Wave 2, new products. This launch E8, as well as Javelin, which will further Drive our performance spec specifically in the peripheral space. And then with EP, you're going to see continued performance of Vera pulse and we'll add to that. With the addition of the Dual energy STS, uh, catheter in the European Union Envision, this is a true turnaround story. You know, we we, we're seeing tremendous results, especially with our technis and Purity iols, you know, just to put that in context in the US, we had our second consecutive year of quarter of double digit growth growing 13%. And then, in the back half of the year, you're also see the launch of the active view. Oasys Max 1 day multifocal for a stigmatism. I know there's a lot there. Well, this is the world's first and only daily disposable lens for people with both astigmatism and presbyopia, surgery, we continue to see performance expect expect expect continued performance on the back of surgery flow is easy and stratafix and then
and I will call out that while our author performance was softer than we would. Like we have strong reasons to believe in continued acceleration through the remainder of the year with, you know, roughly 18, uh, 5 10K, approvals last year, close to 40 outside of the US. And so big launches coming our way, especially in the areas, where we Face the most competition in hips and knees. We have the velis union knee at 2 region revision. Hinge, as well as concise 2 2.0. And then also, in spine, we're seeing the role of roll out of our spine, Velcro
Speaker Change: Robot, as well as try Altus, uh, which we are confident that will continue to bolster our growth and competitiveness. And so, I think in summary, you know, due to easier comps as well as significant. New products, we're confident in continued acceleration in the back half.
For um, lung cancer with riber vent last Clues. Uh, and then on the Medtech side, I think the the really shining star uh well, maybe not the highest number is the EP energy that we have going forward, uh, either maintaining or recapturing that market leadership position, as well as expected improvement in our contact lens business. You saw about 3% growth this quarter uh with the launch of 1 day, ACU Oasys Max that treats presbyopia and the stigmatism. Uh we think there's um even higher growth ahead on the horizon.
Speaker Change: Thank you. Great. Thanks, Chris for the question and Kevin next question, please. Certainly our next question is coming from Terence Sling from Morgan. Stanley, your line is now live
Speaker Change: Great. Uh, thanks so much for taking the question. Uh, you mentioned, uh, oncology Target of 50 billion dollars by uh, end of the decade. Uh, looks like, that's well above consensus. Just wondering if you could, um, point us to the largest Deltas that you see there. I know you've talked about tar, 200 in the past, but maybe any other areas and then, on right brevent subq, can you just confirm that you've responded to the crl? And, um, what the um, uh, Target review, uh, date would be for that. Um, approval. Thank you.
Jennifer: Thanks. Hi, it's Jennifer again. Um, you know, we feel really confident in that fifty billion dollar Target for our oncology business, it's really based on the strength across the base of our business. Uh, you can take a look at at multiple myeloma with darzalex and a lot of continued growth opportunity. Carvykti also, you know, 5 billion dollar plus brand. We've got techy and tal. Um, we might come to it later. Uh, try specific that we've started, um, uh, outlining, um, presenting data on so, so multiple myeloma. We anticipate to continue to be a stronghold. Um, we've got a really nice franchise in prostate cancer right now with erita that is growing very well. Um, you mentioned tar, 200 that is probably the asset that has the biggest disconnect between our internal forecasts and what the street expects. We're really excited for this product and to be launching it in the second half of the year, with the ability to truly transform.
The treatment for non-muscle invasive, bladder cancer there is not been much Innovation there, um, in a very, very, very long time and we think we're going to bring New Hope the data that we've presented there. Um, looks fabulous. We've really designed this product by urologists for urologists to seamlessly fit into routine, clinical practice. And, and we really think that we've got a winner there. And, uh, if just take a look, I think, um, boy, we
Jennifer: See, if you take a look at 2028 consensus, we actually see our numbers at least 3 times higher. So that's a big disconnect.
Jennifer: Ryber vent plus last Clues. So, um, quick update, the the launch is going very well as a reminder ryber vent plus last Clues is the first and only regimen that provides really clinically meaningful overall survival, um, to patients greater than probably 12 months versus OC MIP. If you think about, you know, new patients newly diagnosed patients, they want to live longer. And they do not want to be using, you know, chemo in a first line setting. And so, we think we've really got the, the winning combination and are poised to become the new standard of care. Um, in that front line lung cancer. Uh, egfr mutated lung cancer. And so this is another 1 of our 5 billion dollar plus assets. Um, in terms of of the launch while we're still early in it. Um, as Walken had noted the intent to prescribe has grown consistently and we're now the number 1, regiment, that providers are claiming that they intend to prescribe, for those Frontline patients. We've done great job of of penetrating
We're already in nearly 100% of our high priority accounts and if we take a look really across the lines of therapy, 1 out of every 4 patients across those lines of therapies. Now being initiated on a ryber vant plus Las combination so making really nice progress here. So key to that continued growth is the subq dosage and so we have responded to the agency. Um this was not anything where the agency required any further, clinical studies, or clinical data. Um, this was a manufacturing related question or 2. So so we've responded and we're looking forward to uh to the second half and hopefully getting approval on that.
Speaker Change: Terence John Reed here, if I could build just a little bit on Jennifer, we've had really great momentum in the oncology pipeline in the last.
18 months last year and a half. I think we've had 8.
Speaker Change: Concept readouts, that then gave us the confidence. And now move into late. Stage pivotal studies across the portfolio.
Since you asked about ryber band, I would also remind you that we're in advanced studies now.
Speaker Change: colorectal cancer, which will be
A a huge opportunity for patients and for our portfolio. We're now moving into head and neck squamous cell, carcinoma, with really exciting data there in our early development program.
Uh, on the bladder cancer side. Of course, tart 200 is the star of the portfolio now, but right on its heels, is tart. 210 with a targeted therapy where we've seen complete responses north of 90%. So that is an entire platform for us and we'll be putting other payloads in those devices in the future.
And then, um, in Myoma, we've got a try specific now, coming, uh, romantic. We never satisfied with the status quo building on Tech and towel. And in that if the recommended Phase 2 dose,
Speaker Change: Uh, for patients who had never seen a bcma or a gprc5d. 100% overall response rates. So we really see a great opportunity there to continue to elevate the standard care of myeloma. And then finally in prostate cancer we have great momentum across our pipeline. Most um most recently reporting, for example, an exciting buy specific T-cell engager, past rid of Mag that we think has enormous potential to really transform the practice of medicine and prostate. So the momentum across oncology
To use a very robust.
Speaker Change: Great thanks. Uh, next question, please.
Speaker Change: Our next question is coming from Larry, beagles from Wells. Fargo, your line is now live.
Uh, good morning, thanks for taking the question. So Joe the the guidance implies an acceleration in the Topline growth in the second half of this year. Do you see the 3.5% adjusted operational growth? This year's is something you could Accelerate from next year in DC room to improve the operating margin next year, you know, beyond the implied. I think 32.8% uh in the 2025 guidance. Thank you for taking the question.
Yeah, good morning Larry. Thanks for the question. Uh, in terms of overall sales guidance, where obviously not going to provide that today. But I think when you look at these quarterly results and the momentum that we have with our inline Brands, receiving new indications that certainly and then you complement that with what Jennifer John and Tim have outlined in in terms of new product. Introductions, we certainly see 26 being better than 25 in terms of the the growth rate based on what we know today. Uh, in terms of margin accretion I I'll Reserve uh and keep the powder dry until we get a little bit further into this year. Um, what, you know, we still have some of the effects of Part D redesign that is impacting margins this year. We'll have to see how tariffs play out. Uh, the Rays of 25 cents per share in the Outlook incorporates, 200 million dollars, uh uh of costs.
For this year but it's uh, there's an accounting function and I don't want to get too wonky here in that some of that gets hung up on the balance sheet. So I'd like to see a little bit more things come into view before we really comment on margins, but we certainly appreciate and live by the principle that you have come to know us for and that's growing our bottom line consistent if not better than um our Top Line.
Speaker Change: Thanks Larry for the question and Kevin next question, please.
certainly next question is coming from Assad hater, from Goldman Sachs or Line is now live
Great. Thanks for taking the questions and congrats on very solid performance. In the quarter. Um, maybe just going back to the external environment. Uh, double click a little bit more on your comments and far, more narrative specifically given this announcement last night, uh, from the president that we're going to see something by the end of the month, that's going to start off with a low tariff rate and give companies a year to build. So what do you what do you make of this announcement? And do you have sufficient capacity today to manufacture for the US market in the US and how flexible is your manufacturing supply chain in the US as it relates to adjusting for any tariff impact in 2026? Thank you.
Thank you for the question. This is Haines.
Speaker Change: It's hard to know.
Speaker Change: What is going to happen? Ultimately with tariffs.
Speaker Change: but what we do know for sure, is that the tax policies that just passed
Speaker Change: Are already creating American jobs and and driving Innovation. Uh,
Speaker Change: This, this very policy.
On our way of being able to do that.
Speaker Change: Great thanks. Uh, next question, please.
Speaker Change: Thank you. Next question, is coming from RBC Capital markets for Line is now live.
Well, great, thank you so much. So just do product questions on the Medtech side. Uh, on ottava, it looks like you pushed out the submission timeline to 2026. Can you just elaborate on what's going on there? And then on your EP strategy uh you know you did talk about low neuro rates. Um uh uh you know but I was just wondering if you could share some feedback that you're getting from doctors around appetite for adoption of Vera pulse. Just what are you hearing? Thank you.
Thank you shagon and just to to clarify what we haven't pushed out our timelines at all. Um, in fact we've met all of the Milestones that we've communicated to the market. Both in terms of submission late. Last year approval, late last year, starting the clinical trials, and patients in the first quarter of this year and our expectation that we will file for denovo submission in the first uh um quarter of next year. And so feel very confident about the progress that we're making on ottava. I think, you know, clearly why we feel that we have strong differentiation in that program both on the robot itself as well as our our uh um our digital environment. Uh and we'll continue to provide updates um as um, as that comes to fruition, I would like to touch a little on EP and I appreciate you asking that question because when we look at our performance in the second quarter, clearly that was a major contributor.
Speaker Change: And it wasn't just the EP, it was the 22% that we enjoyed across the cardiovascular portfolio, which is a combination of the performance. By the way, double digit growth in both abiomed and Shockwave ahead of our deal model expectations and improved performance in electrophysiology. Um, and I have to say shagun that, uh, you know, given that we created the EP category for us. This 1 is very personal and while I know that several analysts were quick to write us off earlier this year. You know, we we continue to remain very confident in our ability to retain our Global Market leadership position over the long term. And uh, you know that growth you saw on the second quarter 10%, keep in mind, that's over 5 billion dollar base and that represented a sequential growth of over 9% versus q1 and acceleration within the quarter. And to your question, what drove this. It really was. The continued adoption of variables as we expanded in all commercial regions. We also started first cases in New Markets like China, which is a major market for us and Australia and the feed.
Speaker Change: Back from positions has been phenomenal. We've now, surpassed 10,000 cases globally with the reported neurovascular event rate of of below 0.5. This is well below what we observed in the admirer ID trial and consistent with published other competitive, PFA platforms. We're also further optimizing the catheter based on real world evidence and partnership with clinicians. In fact, we recently received FDA approval for an ifu update to incorporate an optimized flow rate, which further
Speaker Change: The advanced is the product's performance. We're also evaluating new ways for Vera post to maximize.
Speaker Change: Ablation efficiencies and potentially widen, its therapeutic window window, I will say. And I'll say a very bluntly. We are confident that we have a highly competitive catheter in VAR pulse, you know, it provides. Excellent, safety and proficient and precision. Um, it's efficient with only 4 ablations per vein and a smooth learning curve even for first time users and it's also important to mention that vipul's accommodates competitive advantages like the only approved zero fluoro solution and deep sedation workflows workflows which we know are a major benefit to hospitals and patients you know and as we look Beyond vipul's we are bringing to Market. A comprehensive portfolio of Next Generation, PFA catheters to address a broad range of workflows and patient needs.
Speaker Change: I think, you know, already that we received EU approval for our dual energy. STS catheter, the first catheter offer, both PFA and RF technology, uh, and we're also working on an omni pulse. Large tip focal catheter and announced positive trials in uh, in the month of April. I do think it's also worth reinforcing that our strength. As we've said, from the very beginning, is not just down to ablation catheters, but rather the breadth of our portfolio and the end to end to end Solutions. We provide to our electrophysiology customers. You know, it's our entrenched footprint and installed base of 5,000 cardo systems which is widely recognized at The Benchmark in mapping software. It's how broad Network
Speaker Change: This year, you know, EP is currently I think it's fair to say probably the most exciting category in Medtech and let me be clear. We are not rolling over. We are in fact increasingly confident that our 30 years of experience and our full portfolio of offerings positions as well to continue to retain our Global Leadership position over the long term. Thank you, Shaun,
Speaker Change: Thanks Shaun and Tim next question, please.
Speaker Change: Thank you. Next question, today is coming from Alex Hammond from Wolf. Researcher Line is now live.
Alex Hammond: Thanks for taking. The question for tar. 200, can you walk us through JJ's launch strategy? Are their Sales Force training supply chain, patient, access and neurologists, education programs in place.
And as a follow-up, how are you thinking about the ultimate patient penetration here?
Alex Hammond: Hi, thanks so much for that question. So, um, first of all, we think that there's an extraordinary opportunity here. Um, there's 600,000 new patients, that are diagnosed each year and another 400,000, um, that are recurrent. So we really see the opportunity as quite large. We'll be entering in, um, in the the first indication in patients that are experienced or have failed BCG but shortly then after we'll be expanding into that broad non-muscle invasive, um, space and so we do think that there's a lot of patients that are eligible for treatment.
Alex Hammond: You know, um, I think this product really represents the best of what J&J can bring forward. And we have capitalized, not only on the strength of innovative medicine in developing this, but also the strength of Medtech, um, with everything from the engineers to catheter development to the J&J, institutes the training, um, that they have run really, really best-in-class best in Industry so that we can bring forward. Um, a product that will very, very quickly be able to work with your urologists with their practices and to help get this product out to patients. So the launch, I'm not going to go and tell the the details um around the launch planning, but suffice to say that the planning is very very well underway and and the team is very excited for. Um what we're optimistically think is going to be a very successful launch for patients here.
Alex Hammond: Thanks Alex. Next question, please.
Thank you. Next question, is coming from Danielle and Ty from UBS. Your line is now live.
Danielle: Hey, good morning everyone. Thanks so much for for taking the question and congrats on a a really good quarter. Darren what a great quarter to, to start. Um, so just a, just a question on Medtech. I mean, you guys are are already growing closer or in line with the broader Market, you do have some underperformers still in Medtech and surgery and Orthopedics, but you've highlighted a few Avenues from new product launch perspective and improving execution, to getting those back to in line with, with Market.
Danielle: Growth your weathering, you know, EP headwind. So, if we look ahead to 2026 27, is it fair to think of the Medtech business as a closer to high single digit growth business? I mean, how do we think about the impact of these, um, new product, launches in some of the underperformers, the potential for them to re-accelerate and what that means given that you're already back to sort of 5 5 plus percent growth in Medtech, even with them, continuing to underperform. I hope that question makes sense. Thanks so much.
Danielle: No it does Danielle and thank you. Um you know there's a first, this first day, a couple drive drivers that we're very confident will continue to perform extremely well and accelerate as we look to the next few years, certainly our performance and cardiovascular, as I mentioned, the 22% growth in the second quarter. We believe that's going to be a a constant growth driver surgery while you pointed out has been, you know, I'd say underperformed a relative to some of our new entrance in that space. Uh, we are very confident that we're going to build on our leadership position, both in open and laparoscopic surgery with the launch of of ottava. Which, you know, is on the, uh, is on the horizon. I'd say the 2, biggest growth drivers for Medtech going forward will be cardiovascular and our surgery business, especially as we enter the uh, the robotic space. Uh, we believe that our vision business will continue to be a, a, you know, mid single digit to high digit. Uh, single digit performer, you know?
Danielle: And then we continue as I mentioned earlier to look at how we continued improve our performance and our Orthopedics and getting that up to, uh, in market performance. Um, you, we know, you know, that in late 24, we mentioned that part of the EBR. We would grow in that roughly 5 to 7% range at the upper range through 22 to 27 on an operational basis. And we're very confident in our ability to deliver that, uh, I wouldn't want to speculate beyond that at this point in time. Thank you, Danielle.
Speaker Change: Thanks, Danielle. We have time for 1 last question.
Speaker Change: From Google home, security. Your line is now live.
Speaker Change: Great. Thanks for getting in my question and again, Clint congrats on the quarter on the performance. So I just had 1 pipeline question on the Innovative medicine side, that's on your Co antibody therapy, 4 to 4. So, I thought we might see some of the sort of arthritis data already this year, you are, but we didn't see that. As always, we're hoping to see the ivd data later this year. So I'm just wondering if you can, maybe get an update on when we should expect to see those to read outs and then just your general level of enthusiasm I assume. So you have at least some of this data in house and had a chance to see how the competitive Dynamics are playing out in the Immunology space. So I'd love to just kind of get an updated sense of your perspective on on 40 to 4 potential. Thank you.
Speaker Change: now John Reed here, maybe I'll start and then others can supplement but
Speaker Change: Studies. Uh these are Phase, 2 BS, 1 in Crohn's disease and other colitis will be reading out sometime middle of this year. So it's uh, nearing the time when the data may become available.
Speaker Change: And then based on that, we'll make decisions about next steps. As, you know, in the earlier phase 2A study, we saw a really
Speaker Change: Compelling data there, that it looked like this combination of an il23 inhibitor together with a tnf inhibitor 2 products that have been in our pipeline, but coming together could break through the traditional efficacy ceilings in patients with difficult to treat inflammatory bowel disease and give, uh, perhaps more than half of those patients the chance at sustainable complete remission. So, we're excited about this. Co- antibody therapeutic. It will be the first of many such, uh, approaches to trying to address these difficult to treat, patients down the line. Uh, and so, um, we're excited to be in a leadership role there. The first company to really begin this kind of foray of looking at
Going Beyond monotherapy is to dual therapies to address this really complex patients. I would say. While I'm on that though, I'm super excited about our ichor Kendra, the oral targeted peptide. Inhibitor of the aisle 23 receptor, which did achieve a compelling proof of concept. And also have Colitis will be showing those data later this year in a medical meeting. Uh, we have begun gearing up now to do a broad phase 3 campaign in both UC and Crohn's disease.
Speaker Change: Based on those compelling data and we think we're on the cusp of being able to offer.
Speaker Change: The convenience of a once a day pill together with efficacy on par with the best of the biologics and with a pristine safety profile. So a lot of momentum in Immunology across multiple indications, but, uh, IBD in particular
Speaker Change: Thanks family. And thanks to everyone for your questions and your interest in J&J.
Wain: I'll now turn the call over to Wain for some closing remarks.
Thank you for joining the call today.
Wain: Our Q2 results reflect the depth and strength of
Wain: Our uniquely Diversified business. And as you heard, we expect elevated growth in the second half of the year.
Wain: We have a lot to look forward over the next 6 months with game-changing approvals and submissions anticipated in areas like glang and bladder cancer, major depressive disorder, psoriasis, surgery and cardiovascular.
Wain: This Milestones will extend and improve lives in transformative ways and deliver significant value to patients and shareholders. Thank you for your continued interest in Johnson and Johnson, and enjoy the rest of the day.
Thank you, this concludes today's councilman Johnson second quarter, 2025 earnings conference call. You may now disconnect